Michael Shelley DLDU, DLDC, MBA (DCU) Chief Underwriter Irish Life Financial Service

Transcription

1 Michael Shelley DLDU, DLDC, MBA (DCU) Chief Underwriter Irish Life Financial Service

2 Agenda 1. Key Person Cover Reasons for Cover Case Studies Presenting your Case to Underwriting 2. Claims Review of Gender Differences in Claims Life & Specified Claims Implications for Underwriting Supporting Conversations around Protection

3 KeyPerson Cover What does it mean? Underwriting rules of thumb Taxation capital or revenue How best to present a case

4 Key Person Cover To compensate the business for financial losses from: the death or extended incapacity of the key person. The aim is to compensate for losses and facilitate business continuity. A Keyperson is someone whose knowledge, work, or overall contribution is considered uniquely valuable to the company.

5 Key Person Cover Reasons for 1. Keyperson Loss of Profits Replace anticipated loss of profits Sum insured guidelines 2 x average Gross Profit (Turnover less cost of sales) attributable to the keyperson Sum of cover for all keypersons should not exceed these multiples

6 Key Person Cover Reasons for 2. Keyperson Loan cover Reduce the debt burden of the business Sum insured guidelines Consider up to the full amount of the loan Cover for overdraft facilities is not recommended Caution putting cover in place on existing asset backed loans

7 Loan Cover Existing Loans Key steps to covering large existing loans 1. Reason for cover now 2. Schedule of all cover in the market 3. Current loan balance & term remaining 4. Show ability to meet repayments 5. Overall financial profile

8 Key Person Cover Reasons for 3. Keyperson replacement costs Recruitment and/or short term contractor costs Sum insured guidelines Recruitment fees plus Contractor s costs Generally assessed as between 2 10 x salary

9 KeyPerson Cover Reasons for 4. Keyperson Investor Protection An investor or venture capital group seeking protection for part of their investment Sum insured guidelines Amount of cover should not automatically match the investment Business should still be the beneficiary

10 Financial Evidence As a General Rule: Up to 1.5m financial questionnaire need only be signed by you & life insured 1.5m 3m, signed by you, the customer and company director Insured s position and role in the company Basis for calculation of cover Other cover in force in the market & trading figures

11 Taxation Loan Repayment Premiums are not deductible for Corporation Tax Proceeds on death are treated as a capital receipt & not subject to tax Loss of Profits Premiums are treated as a trading expense and are deductible against corporation tax Proceeds on death are treated as a trading receipt, and subject to corporation 12.5% Final call is with Revenue

12 Communication is Key Access to Underwriting Reinsurance Relationship Communication On line Financial Information Dedicated Underwriters

13 Presenting your Case 1. Be Clear about the risk that the Business wants to Cover 2. Set out the basis for the calculation of cover, especially if for a combination of reasons 3. Discuss finances up front with an underwriter 4. Multiple Applications don t assume the life office will link them up! 5. One detailed background report can be invaluable

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15 You can t put a value on human life, but my wife s life insurance company made a pretty fair offer. Anonymous

16 Gender Directive In place since 21 st December 2012, everyone now charged the same basic rates for Protection Cover But Claims is the experience the same for males & females? How does that affect our underwriting of medical risks?

17 Death Claims (IL & CL)

18 Death Claims

19 Death Claims

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21 Death Claims

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23 Death Claims

24 Death Claims

25 Death Claims 2013 Accidents are the No. 1 cause of deaths for lives under age 40 The average age of the accidental adult death cases was 48 47% of all life cover claims for claimants under 40 were results of accidents Downward trend in RTA s The average duration in force for accident related claims was 8 years. 25

26 SIC Claims (IL & CL)

27 SIC Claims

28 SIC Claims

29 SIC Claims

30 SIC Claims

31 SIC Claims Partial Payments Partial Payment conditions Cerebral aneurysm with surgery or radiotherapy Craniotomy for AV malformation Ductal Carcinoma in situ Breast Loss of one limb Low level prostate cancer 38 Serious Accident Cover resulting 28 days in hospital Severe Burns 5% body surface Single Vessel Angioplasty Surgical removal of one eye

32 Lessons learned from Claims Cancer is the No 1 cause of claims for both males & females Except under age 40 Breast & Prostate Cancer are the top 2 causes of SIC claims Difference in Heart Related claims is most stark on SIC Be extra careful with Replacement Cover

33 Learning for Underwriting The outcomes do affect how we assess at underwriting 40 yr old, with a BMI of 32, on treatment to control B.P. and a family history of heart disease father & brother Outcomes for Life & SIC will differ depending on gender of applicant

34 Learning for Underwriting 1. Heart Related Conditions 2. Breast Cancer & M.S. 3. Family History 4. Outcomes do differ

35 Always look on the bright side age&v=spaqgwasqhy

36 Discussion